The Audit and Quality Assurance Crisis of 2025 Is Worse Than Expected

Published by Sidra posted in Resources on July 28, 2025

In 2025, the audit and quality assurance profession faces growing doubts from both businesses and the public. Reports show that audit quality is declining, while risks are rising fast. Many auditors in UK are missing red flags. Others are failing to adapt to the fast-changing environment.

At Apex Accountants, we work closely with clients who rely on strong audits to protect their business. Yet the system itself is struggling. This article explains what’s going wrong with audits today and what needs to change.

Risk Assessment Failures Are Common

Risk assessment is a core part of any audit. But in 2025, many firms are failing to do this properly. Regulators such as the Financial Reporting Council (FRC) have found repeated issues.

Audit teams often don’t look closely enough at high-risk areas. In some cases, they don’t collect enough proof to back up their work. There’s also weak judgement when classifying risk—especially in firms that use complex IT or data systems.

This failure to assess and document risks properly leads to poor audits and missed fraud signs.

Audit and Quality Assurance Teams Are Short-Staffed and Overworked

Another major problem is a lack of skilled auditors. Many firms are struggling to hire and keep talent. This has led to increased pressure on existing staff. The Chartered Institute of Internal Auditors (CIIA) also highlights that challenges in staffing and skills gaps remain prominent concerns within the UK internal audit profession. This conclusion is confirmed by survey responses and professional reports, which emphasise increasing workload pressures and an evolving risk throughout 2025.

Instead of deep reviews, auditors often carry out basic checks just to meet deadlines. This increases the chance of errors and reduces the value of the audit.

New Risks Are Emerging Faster Than Auditors Can React

Technology is moving quickly. Businesses now face threats from AI misuse, cybercrime, and automation errors. They also need to comply with ESG (environmental, social, and governance) standards and climate reporting rules.

But many audit firms are not keeping up. There is a clear mismatch between today’s top business risks and the areas auditors are focusing on. Some are still relying on old tools and outdated testing methods.

At Apex Accountants, we help clients spot gaps early and adjust their risk controls in real time. Unfortunately, many larger firms are struggling to do the same.

Audit Independence Remains a Concern

Another long-running issue is audit independence. Large firms, especially the “Big Four,” often provide both audit and consultancy services to the same clients. This creates a clear conflict of interest.

There is rising concern that audit quality suffers when firms are also chasing big consultancy deals. Regulators are now taking a closer look at ethics breaches and poor professional conduct.

Audit must be independent to be reliable. Without clear separation between audit and advisory services, trust is lost.

Auditors in UK Still Fail to Raise Red Flags

Too often, auditors fail to report serious concerns before it’s too late. In fact, research shows that in nearly three-quarters of major company failures, the auditor did not issue a warning.

Auditors tend to accept management’s statements without asking enough questions. There is a lack of professional scepticism. This leads to missed fraud risks, overestimated assets, and weak going concern assessments.

In these cases, audits provide a false sense of security—rather than a true check on financial health.

Regulation Is Growing, But Is It Enough?

Governments and regulators are responding to audit failures. Bodies like the FRC, PCAOB, and others have increased inspections and fines. In the UK, penalties for poor audits have reached record levels.

There are new proposals to:

Improve competition in the audit market
Enforce stricter quality standards
Strengthen auditor independence

However, many in the industry worry that these reforms are too slow. Some fear that political pressure will water them down.

Without bold steps, it’s unlikely that public confidence will return.

Common Audit Quality Gaps in 2025

Here’s a quick look at the most common audit and quality assurance problems we’re seeing in 2025:

Problem Area	What’s Going Wrong
Risk Assessment	Poor understanding of fraud, IT, and financial risks.
Staff Shortages	Not enough skilled auditors to meet demand.
Weak Challenge	Failure to question management on key estimates and figures.
Tech Use	Slow to adopt modern tools or automation for testing.
ESG Auditing	Struggling to follow changing rules around climate and compliance.
Conflicts of Interest	Audit quality is reduced by advisory service pressure.
Unclear Reforms	Lack of timeline and clarity for new rules.

These are not isolated cases. They reflect a wider issue in the way audits are carried out across sectors.

Internal Audit and Quality Assurance Teams Also Face Pressure

It’s not just external audits facing challenges. Internal audit teams are also facing issues. They’re expected to cover IT risks, ESG data, global supply chains, and more.

But most teams lack the resources or training to meet this new demand. There’s a push to evolve and invest in new tools, but progress is slow.

Without support, internal audits may fall short of stakeholder expectations.

What Can Be Done to Fix the Audit Failures?

The audit sector needs major change to fix the current problems. Here’s what needs to happen:

More Skilled Auditors: Firms need to invest in staff training and hire more qualified people.
Better Use of Technology: Audit firms must adopt smart tools for testing, analysis, and fraud detection.
Stronger Regulation: Governments must follow through on reforms, not delay or dilute them.
Clear Separation: Audit and consultancy services should be fully separated to protect independence.
Greater Transparency: Auditors should explain how they derived the key conclusions.
Improved ESG Audits: Teams must keep up with climate, sustainability, and ethical standards.

At Apex Accountants, we support these changes and help clients navigate external and internal audits with full transparency and support.

How Apex Accountants Supports Audit and Quality Assurance

Our approach is different. We work closely with clients to provide:

Clear audit preparation and documentation
Ongoing support with internal controls
ESG and risk review services
Transparent communication at each stage

We don’t believe in tick-box reviews. Our work is built on thorough testing, fair judgement, and trusted advice.

A Sector at a Crossroads

In 2025, the audit profession stands at a turning point. If reforms are delayed or watered down, public trust may fall even further.

The only way forward is through investment in people, processes, and technology—combined with bold reform and real accountability.

Businesses deserve audits that offer real value. At Apex Accountants, we don’t conduct statutory audits—but we help companies get fully prepared for them. Our role is to make the audit process smoother, faster, and more reliable for both you and your auditors.

By working with Apex Accountants, you reduce the risk of delays, audit findings, or compliance issues—while gaining clarity and peace of mind. Contact Apex Accountants today if you need assistance with preparing for an upcoming audit or financial review.